The European Court of Human Rights has ordered Russia to pay former shareholders in defunct Russian oil company Yukos $2.5 billion in compensation.

The ruling on July 31 was swiftly condemned by Russia's Justice Ministry as unfair and biased.

The ministry said it could appeal the decision within three months.

The court ruling came after the former oil giant argued Russia had unlawfully seized it through a sham action, after demanding bogus taxes.

The court also ordered Russia to pay some $400,000 toward the plaintiffs' costs.

The ruling said Russia must produce a plan to make the payments within six months.

The award is the largest ever from the Strasbourg-based court, which was established in 1959 to hear cases involving alleged violations of the European Convention on Human Rights.

Earlier this month, an international arbitration court in The Hague ruled that Russia owed former Yukos shareholders $50 billion in compensation.

Yukos, once valued at around $40 billion, was dissolved by the government after its chief executive, Mikhail Khodorkovsky, was jailed on tax-evasion charges in 2003.

The Kremlin critic was released from prison last year.

Most of Yukos's assets were handed to Rosneft, an energy company run by an ally of Russian President Vladimir Putin.

The compensation was being sought on behalf of all Yukos shareholders.

There are around 55,000 named Yukos shareholders, some of which are funds representing a number of shareholders.

They were seeking damages of some $50 billion.

Khodorkovsky spokeswoman Olga Pispanen welcomed the ruling, saying, "We received the news with great joy."

Leonid Nevzlin, a former Yukos executive and top shareholder, told Echo Moskvy radio the court ruling was "another confirmation of the fact that everything that Russia did against the oil company was illegal."